Monday, September 24, 2012

Health care insurance

Everyone in business is waiting to find out how the new federal health care laws will affect them. An interesting e-mail came from a man I know in the health care insurance industry with whom I had discussed the ramifications of Obamacare. In our latest exchange I asked him how people in the insurance business felt about it and this was his reply:

    There are two ways to consider the health insurance question. One thing is good for consumers and bad for the industry. It is the removal of preconditions for coverage. Since the business makes money by taking in more than it pays out, the firms are profitable. But now having to cover the sickest with no preconditions may be very expensive, which could shoot profits. About 90 % of healthcare is spent on the sickest 5 %.
    On the other hand, since everyone will be forced to have insurance through the individual mandate, many more people will be paying money to insurers which will cause a big growth in revenue. The question is if it will offset the issue above.
    My personal guess is that insurers will make out very well. If the profits decrease, premiums will go up for everyone to make up for it. Our last two years have been consecutively the best in the company's history, and this year is tracking even better.
    The bulk of new rules don't hit until 2014 though, so there is still a year or two to go before that is known.

That's not the answer other businesses need, but it does say one thing for sure. Insurance companies will make out because they can and will raise their rates. For most businesses and the working public, the 2012 election will make a vast difference in their finances and especially in the direction our country will take in the future.

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